Azerbaijani economy to get considerably diversified in 2014

The New Year of 2014 has been named as Industry Year in Azerbaijan. This comes as experts say they expected announcement because of economic and industrial developments of the country.

Vugar Bayramov, the chairman of the Center for Economic and Social Development told AzerNews that 2014 will be remembered in Azerbaijan as the year of sharp diversification of economy.

"The development of industry and economic investment in the industrial sector is important to diversify the economy of the country," he noted. "In 2013 the Economic Development Ministry was renamed to the Economy and Industry Ministry. This should be evaluated as a message indicating that Azerbaijan has already completed its economic development and entered the industrial development and industrialization stage."

Azerbaijani President Ilham Aliyev signed a decree on January 10 to announce 2014 as the year of industry in Azerbaijan. The president instructed the Economy and Industry Ministry to develop a plan within a month. Also, the Cabinet of Ministers was instructed to develop a draft program on the development of industry section in Azerbaijan in 2015-2020 within three months. Both documents should be handed over to the president.

Bayramov went on to say that the gross domestic product (GDP) increased by 6 percent and the non-oil sector by 9 percent in 2013. The volume of Azerbaijan's state currency reserves has reached $50 billion. In this context the economic development in 2013 paves the way for diversification of the industry in 2014.

"The share of the non-oil sector in the GDP will increase to 62 percent in 2014. This means the share of the non-oil sector will boost by three-fold and exceed a 60-percent limit. The share of the non-oil sector in the budget incomes will exceed a 30-percent limit which was 25 percent in previous years," he said.

The expert also noted the volume of transfers from the state oil fund SOFAZ to state budget will decrease by 17.7 percent in 2014 as well.

Necessary measures

Touching on the measures which are important for the development of the industry in the country Bayramov stressed the necessity of implementing necessary measures to attract foreign investment.

He also mentioned the importance of adopting the Competition Code. "The adoption of the Competition Code has been delayed repeatedly though it has been submitted to the parliament. Industrial development is possible only by restoring the competition in this sector. The Competition Code should become the main document to ensure a fair competition in the industrial sector," he noted.

"Also, it is necessary to complete the process of establishment of special economic zones across the country," Bayramov noted.

"The establishment of special economic zones is important for attracting investments in the industrial sector. Azerbaijan can accelerate the process of attracting foreign investment in the country through applying tax concessions to foreign investments, as well as implementing other stimulation measures," he said. "If Azerbaijan was able to attract a record volume of investment-around $29 billion in 2013, the establishment of special economic zones could play a great role to press ahead the industrial progress of the country."

Bayramov also emphasized the importance of accelerating the establishment of clusters in Azerbaijan's regions. "The establishment of clusters in touristic regions is very important. These clusters will pave the way for attracting foreign investments in the regions," he said.

The expert believes that the decision on exemption of the techno parks from all taxes by seven years since January 1, 2013 is a positive decision.

"This decision stimulated the establishment of techno parks. It is better to establish the techno parks not only in Baku but also in surrounding areas and regions. Because, the process will attract local and foreign investment," he noted.

Bayramov went on to note that work to attract foreign investment should continue. He said that the improvement of the investment climate depends on the level of use of the e-government tools.

"In recent years Azerbaijan has been seriously using the opportunities of the e-government, and it is important not only from the viewpoint of attraction of investment, but also improvement of the investment climate," the expert said.

Also, Azerbaijan should achieve the development of not only the non-oil sector, but also the oil sector, Bayramov stressed.

"As is known, the "Contract of the Century" which was inked in 1994 between Azerbaijan and BP, expires in 2024. Signing of an agreement on extension of the "Contract of the Century" would pave the way to attract more investment of the foreign companies in the oil sector which will make possible to stimulate the development of this sector," the expert said.

Economic expert Ogtay Hagverdiyev maintained that the development of the science- industrial fields is important for Azerbaijan to produce competitive and export-oriented products.

"It is important because Azerbaijan should develop an export potential which will become an alternative to the oil sector," he said. "Our strategic purpose is to develop the non-oil sector with modern methods. One of them is the information technologies sector which is developing in Azerbaijan," the expert said.

He also said Azerbaijan is able to develop the winemaking and light industry as the country possesses enough raw materials - grape and cotton.

"These two fields, in turn, would provide an impetus to the development of agriculture," the expert noted.

Investment

Bayramov said, Great Britain, Turkey, the European Union (EU) countries and the U.S. can be the major investors for Azerbaijan.

He noted that Azerbaijan has imported part of the working force over the past few years.

"It is expected that the number of the specialists both in the oil and non-oil sector coming from the EU countries increase. Also, it is expected that Azerbaijan will meet its demand for workforce involved in the construction and other sectors by recruiting migrants of China, Pakistan and Bangladesh," he said.

Bayramov also said that the development of the industrial sector will impact the market as well. It will show itself in increase of local products on the domestic markets compared to imported goods.

"The development of the industrial sector during the Industry Year will lead to the increase of the local products in the local market. It is predicted that the products of the light and food industries will increase in the local market. On food security, Azerbaijan intends to increase the share of the food products in the market because it is very important for the country," he noted.

"Today Azerbaijan exports its oil products to the world markets. Announcement of the Industry Year will allow the country to export not only oil products, but also other industrial goods," Bayramov stressed.

"This is not a short-term process. Azerbaijan would appropriate ground for entering the world markets by non-oil products. Thus, 2014 will be characterized for Azerbaijan as the year to enter the world and the European markets with non-oil products," he said.

Leading country in the region

Bayramov believes the announcement of the Industry Year will allow Azerbaijan to expand its leading position in the South Caucasus region.

"Today Azerbaijan is the leading country of South Caucasus in economic term. 80 percent of the economic incomes of the region go to Azerbaijan. Neighboring Georgia participates in all the inked energy agreements. It is predicted that some of this projects will be implemented in 2014. This, in turn, will pave the way to attract investment in both countries.

Thus, this year Azerbaijan which has carried out the successful policy of industrialization of the country since its independence will strengthen its industrial position. The industrial development in Azerbaijan will hugely contribute to the social and economic development of the country.